What Is HRO and How It Compares to PEO

Any company with employees, even just a few, has the need of some human resources management. Someone will have to handle payroll, workers' compensation, benefits and recruitment. For small companies, it doesn't make sense to hire an HR manager, however. One option available to companies in this situation, is to outsource their human resources work. At this point, the company could contact one of the HRO providers in their area. A similar option is to work with a PEO. If you're facing this decision, it's important to understand the difference between an HRO company and a PEO provider, especially because some providers offer both types of functions.

Become Familiar With the PEO

PEO stands for professional employer organization and is basically a bundle of services that are completed on behalf of the business. These services often include insurance benefits, payroll assistance, help in recruiting new employees, risk management, and worker's compensation coverage, some of which have already been mentioned. Essentially, when a business seeks to work with a PEO, the professional employer organization becomes a co-employer, leasing the employees and becoming the employer of record for tax purposes. How is this different from an HRO company?

Get to Know the HRO

HRO stands for human resources outsourcing and this company, much like the PEO firm, offers assistance with some or all of the human resources needs of a business. These may include very basic services or could include a full selection of very detailed services. In some cases, the HRO providers will allow the business owner to bundle a selection of chosen services, appropriate for the business' needs. This gives small business owners the chance to pay only for those services needed.

Pros and Cons

What are some of the pros and cons of each option? One of the main reasons business owners opt for an HRO is the amount of flexibility entailed. The HRO allows business owners to choose those services to be outsourced and determine which will be kept in-house. A PEO provides for all of the human resources function. This is an advantage for many organizations, including smaller businesses and growing companies. There are some disadvantages to each option. For example, the PEO doesn't offer the same orientation of friendly customer services and some HRO providers may not allow the same freedom of selection as others.

It Comes Down to You

Which option is best for your business? This depends a great deal on the size and shape of your business. Small or new companies often choose to work with a PEO while larger, more established companies tend to work with an HRO company. You'll have to do a little research to determine which is most appropriate for you.

John Trinh has been writing for 10+ years. He first delved into the world of writing when he wrote his first article for his university's paper. Since then, John has enjoyed writing about technology, business, marketing, and anything that he thinks he should write about.For more details visit at:hro providers

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